Rising Autism Diagnoses and Federal Funding Fuel M&A in Special Education
US federal funding for special education has grown from $2.0 billion in 1992 to $14.2 billion in 2023, a 6.5% annual rate, while the share of special education students with autism climbed from 7.1% to 12.2% in a decade. Deal volume set a record 93 transactions in 2022, and financial buyers accounted for roughly two thirds of activity since.
Special education is an educational approach that caters to the diverse needs of students with disabilities, ranging from physical, sensory, and intellectual impairments to emotional and behavioral challenges. Roughly 7.3 million students received these services in 2021-22, about 15% of the total K-12 population and almost double the share of the late 1970s. Federal funding has grown alongside that population, from $2.0 billion in 1992 to $14.2 billion in 2023.
What makes the sector investable is the combination of a legally mandated service, a growing eligible population, and a fragmented provider base. Autism is now the fourth most common disability category under IDEA, and the share of special education students with autism has risen from 7.1% to 12.2% over the last decade. That has drawn sustained interest in applied behavior analysis providers, therapeutic day schools, and the software that supports individualized instruction, with 2022 setting a record for deal volume in the sector.
How Federal Funding, a Growing Eligible Population, and Rising Autism Diagnoses Are Reshaping Special Education M&A
Federal funding has grown sevenfold since 1992. From 1992 to 2023, US federal funding for special education surged from $2.0 billion to $14.2 billion, a compound annual growth rate of 6.5%, demonstrating the government’s commitment to supporting special education programs. The FY2024 budget request from the US Department of Education calls for $16.3 billion.
The eligible population has doubled. The population of students receiving special education has doubled since the late 1970s, from 3.6 million in 1976-77 to nearly 7.3 million in 2021-22, a CAGR of 1.6% over the period. Those students now represent approximately 15% of the total K-12 student population nationwide.
Software is the fastest-moving segment. The global special education software market was valued at $3.4 billion in 2022 and is projected to reach $5.0 billion by 2030, a CAGR of 4.8% over the period. Digital learning has gained popularity among students and educators, and technology integrations help students with autism build communication and social skills.
Special Education at a Glance
The main funding sources are the Every Student Succeeds Act (ESSA) and the Individuals with Disabilities Education Act (IDEA). While ESSA provides categorical funding to enhance student achievement, IDEA, established in 1975, represents the primary federal support for special education and has helped secure access to a free appropriate public education for children with disabilities in the United States.
IDEA has been particularly instrumental in supporting Applied Behavior Analysis (ABA) therapy, which targets behavioral challenges through behavioral principles and is often funded through private insurance, Medicaid, or grants. The Individualized Education Program (IEP), a legal document under IDEA, outlines the services needed to support a student with disabilities in their academic setting, and IDEA ensures those services are provided at no cost to parents through the public education system.
Increasing Government Funding
Recognizing the essential need for tailored educational support, there has been a marked increase in government funding for special education. Between 1992 and 2023, federal funding rose from $2.0 billion to $14.2 billion, growing at a 6.5% CAGR. The number of students in special education has climbed substantially over the same period, from 3.6 million in 1976-77 to nearly 7.3 million in 2021-22, a 1.6% CAGR, and those students now constitute approximately 15% of the total K-12 population nationwide.
Funding Varies Widely by State
At the state level, funding amounts vary significantly. On average, students without disabilities receive $4,000 to $10,000, while those with disabilities receive $10,000 to $20,000. Federal support, largely through categorical grants to state education agencies, makes up approximately 10% of the total budget for special education, and local taxes contribute around 40% to 50%. That heavy reliance on local property taxes leads to funding disparities within local communities, and some states are addressing the issue with formulas that help equalize funding and allocate more resources to disadvantaged areas.
Autism on the Rise Among US Children
Under IDEA, there are 13 disability categories in special education, with autism ranking as the fourth most common disability among US students. According to the US Department of Education, the percentage of students with autism grew from 7.1% in 2011-12 to 12.2% in 2021-22. That increase in diagnoses underscores the growing need for specialized educational services for this group of students, and special education will continue to play a crucial role in supporting their independence and guiding them through a successful educational journey.
Special Education M&A Volume
M&A volume in the special education sector set an annual record in 2022 with 93 relevant transactions. Among those 93, 66 were made by financial buyers, or 71%, and 27 by strategic buyers, or 29%. Of all the transactions that disclosed valuations, the median deal size was $5.0 million for buyouts and $25.2 million for strategic transactions. In 2023 through October, there have been 42 total transactions in the sector, with 19 completed by strategic buyers and 23 by financial buyers.
Software Market Attracts New Investors
Digital learning has gained popularity among students and educators in recent years, driving significant growth in the special education software market. The global market was valued at $3.4 billion in 2022 and is expected to reach $5.0 billion by 2030, a CAGR of 4.8% over the period. Technological advances let educators craft more engaging and customized content and deliver it through interactive whiteboards, video, music, and audio texts, adapting to each student’s needs. For students with autism, those integrations support communication and social skill development, creating a more inclusive learning experience.
FullBloom acquires EmpowerU. In September 2023, FullBloom, backed by American Securities and a leading provider of special education, instructional intervention, behavioral health, and professional development solutions, acquired EmpowerU. EmpowerU provides evidence-based programs focused on student behavior and mental health, delivering highly personalized content and interactive lessons through its online platform. With more than 150,000 children and 25,000 educators across 1,100 school districts, the acquisition aligns with FullBloom’s strategy of delivering high-quality special education programs while efficiently managing education and healthcare costs for students and parents.
Five Arrows acquires n2y. In April 2023, Five Arrows Principal Investments acquired n2y. Five Arrows is the private equity arm of Rothschild & Co., invests across education and healthcare, and has a history of supporting companies addressing learning disabilities and special needs in Europe and North America. n2y is a pioneering force in special education, known for its research-driven digital solutions and materials, and its SaaS platform offers an integrated suite that has advanced the educational growth and inclusion of millions of students from pre-K to 12 and beyond. Five Arrows will support n2y in expanding its solution offerings, entering new markets, and reaching more children.
Other Notable Transactions
October 2023: BlueSprig, an autism treatment provider, acquired Trumpet Behavioral Health and its affiliates, Therapeutic Pathways and the Behavior Center. Trumpet is known for behavioral health services specializing in Autism Spectrum Disorder and other developmental disabilities, and the acquisition aims to expand BlueSprig’s geographical reach to more families and underserved communities. An operator of 37 autism care centers across seven states, Trumpet joins BlueSprig’s family of affiliated companies, which includes the Florida Autism Center, Aptitude Habilitation Services, the Fusion Autism Center, and the Cedar Group.
August 2023: Health Connect America, a mission-driven behavioral health services platform under the ownership of Palladium Equity Partners, acquired Specialized Youth Services of Virginia, marking its sixth add-on acquisition in less than two years. Specialized Youth Services of Virginia was established in 1991 to provide educational and treatment services to at-risk children who cannot be successfully served through their local schools and other public service agencies. The acquisition bolsters Health Connect America’s growth in Virginia, enhancing its service and geographical diversity.
July 2023: Specialized Education Services, Inc. (SESI) acquired Lattice Educational Services, a provider of individualized learning opportunities and resources to students with developmental disabilities. Lattice’s emphasis on intensive nonpublic education aligns with SESI’s commitment to K-12 special needs learners. The acquisition enhances SESI’s special education portfolio, becoming its ninth program in California and adding to nearly 100 schools nationwide for students with developmental disabilities, autism, and behavioral challenges.
June 2023: Giggles Therapy was acquired by Kids S.P.O.T., with financial backing from Pine Tree Equity Partners. Giggles Therapy operates a child therapy center serving children with autism and other disorders, with services including consultations, social skills programs, one-on-one therapy, and parent training. The acquisition is expected to support Kids S.P.O.T.’s future success by expanding its capabilities and services for children with special needs.
Select Transactions
The table below summarizes special education transactions from January 2021 through October 2023, spanning ABA and behavioral health providers, therapeutic day schools, pediatric therapy clinics, residential and supported living operators, and special education software.
| Date | Target | Acquirer | Target Business Description |
|---|---|---|---|
| 18-Oct-23 | Trumpet Behavioral Health | BlueSprig Pediatrics | Provider of behavioral health services to children and adults with autism spectrum disorders. |
| 18-Sep-23 | Thrive Alliance Group | Audax Private Equity | Provider of mental wellness services to students and school staff. |
| 13-Sep-23 | EmpowerU | FullBloom | An e-learning platform to improve students’ mental health. |
| 13-Sep-23 | Pax Centre | Emerald Clinics | A multidisciplinary psychological trauma care center in Australia. |
| 16-Aug-23 | Bright Behavior | ABA Connect | Provider of ABA services to children with autism. |
| 03-Aug-23 | Specialized Youth Services of Virginia | Health Connect America | Provider of educational and treatment services for at-risk children. |
| 11-Jul-23 | Neuroscience Education Institute | HMP Global | Provides medical education to healthcare professionals. |
| 11-Jul-23 | Lattice Educational Services | Specialized Education Services | Provides individualized learning opportunities and resources to students with developmental disabilities. |
| 26-Jun-23 | Oxford ADHD and Autism Centre | Clinical Partners | Operator of a medical center based in Oxford, England. |
| 23-Jun-23 | South West Intervention Services | Tristone Healthcare | Provider of educational intervention services to children and their families. |
| 01-Jun-23 | Giggles Therapy | Kids Speech, Physical and Occupational Therapy | A child therapy center treating autism or other disorders. |
| 18-Apr-23 | Springtide Child Development | Cortica | Operator of a behavioral clinic to serve children with developmental delays and disabilities. |
| 04-Apr-23 | n2y | Five Arrows Principal Investments | Developer of a cloud-based special education publishing platform for the pre-K-12 market. |
| 14-Mar-23 | De Praktische GGZ | Holland Capital | Provider of outpatient mental health care. |
| 10-Mar-23 | Songbird | Kyo | Provider of ABA therapy to children with autism. |
| 07-Mar-23 | Witham Valley Care Group | Choice Care | Provider of residential care and supported living services to people with learning disabilities, autism, and mental health conditions. |
| 01-Mar-23 | ABA2DAY Behavior Services | Ares Capital Corporation BDC | Provider of educational and behavioral health services to people with autism and other special needs. |
| 28-Feb-23 | Zero Three Care Homes | Montreux Capital Management | Provider of specialist residential and domiciliary care services to people with learning disabilities. |
| 10-Feb-23 | Apolo Kids | Kokoro Kids | An online education platform supporting neurodivergent children. |
| 08-Feb-23 | RICBT | Refresh Mental Health | Provider of cognitive behavioral therapy and coaching in Rhode Island. |
| 01-Feb-23 | Stokes Counseling Services | Eads Bridge Holdings | Provider of counseling services to children, adults and families. |
| 01-Feb-23 | Marion Lauder House | Careconcepts | Provider of specialist care and education across schools, day centers, and residential homes for children and adults. |
| 18-Jan-23 | BASE Education | 7 Mindsets | An SEL software platform for special education students. |
| 16-Jan-23 | Therapeutic Pathways | Trumpet Behavioral Health | Provider of healthcare services to serve children with autism. |
| 22-Dec-22 | Wycombe Care | Apposite Capital | Provider of residential care and services to people with learning disabilities, mental health disorders, and acquired brain injuries. |
| 12-Dec-22 | Achieve Beyond | INSPIRA | Provider of pediatric therapy, behavioral and educational services to developmentally delayed and disabled children and their families. |
| 12-Dec-22 | ABA Connect | MBF Healthcare Partners | Provider of ABA services and learning centers for autistic children. |
| 02-Dec-22 | Building Blocks Behavior Consultants | Five Arrows Capital Partners | Provider of applied behavioral analysis therapy to children who carry a diagnosis of the autism spectrum. |
| 01-Dec-22 | Autism Learning Collaborative | Apara Autism Center | Provider of ABA services to children. |
| 01-Dec-22 | Early Autism Services | Apara Autism Center | Provider of clinic and home-based applied behavior analysis therapy services to children. |
| 01-Dec-22 | Inner Circle Autism | Council Capital | Provider of ABA services to children. |
| 28-Nov-22 | My Life Choice | Optimo Care Group | Care provider serving people with autism and learning disabilities. |
| 27-Nov-22 | Lighthouse Autism Center | Cerberus Capital Management | Operator of autism centers intended to provide ABA therapy. |
| 01-Oct-22 | Marion Lauder House | Gresham House | Provider of specialist care and education services across schools, day centers and residential homes for children and adults. |
| 22-Sep-22 | Global Behavior Education Alliance | Patriot Capital | Operator of an ASD treatment center in Colorado. |
| 15-Sep-22 | Institute For Child and Family Health | Cayuga Centers | Provider of behavioral health, educational, and prevention services to children, adolescents, and families. |
| 06-Sep-22 | Action Behavior Centers | Charlesbank Capital Partners | Provider of ABA therapy for children on the autism spectrum. |
| 01-Sep-22 | Big Lake Psychological Services | Heritage Health | Provider of psychological services offering strategies to help children and adults learn, grow and thrive. |
| 31-Aug-22 | Breakthrough Behavior | Acorn Health | Seven ABA practice centers for children based in Florida and Virginia. |
| 17-Aug-22 | Southeast Psych | ARC Psychiatry | Provider of mental health services. |
| 12-Aug-22 | Point Quest Education | Avesi Partners | Provider of adolescent behavioral health and special education services serving K-12 school districts. |
| 12-Aug-22 | Aaron School & Rebecca School | Audax Private Equity | Private, special needs therapeutic day schools catering to students aged 3 to 21. |
| 15-Jul-22 | Highgate Hill House School | Innervation Capital Partners | Operator of an independent co-educational day school serving children with special educational needs. |
| 12-Jul-22 | Center for Behavioral, Educational & Social Therapies | Five Arrows Capital Partners | Provider of ABA services catering to children with special needs. |
| 05-Jul-22 | Hallmark Youthcare Richmond | Acute Behavioral Health | Provider of short-term residential care services for young people with behavioral and mental health needs. |
| 30-Jun-22 | 1to1 Therapy Services | BDC Capital | Operator of a therapy center serving clients in the Toronto, York, Peel and Durham regions of Canada. |
| 09-Jun-22 | LiftEd | CentralReach | Developer of an education management application for educators to improve learning outcomes for learners with disabilities. |
| 12-May-22 | Sunlight Education Nucleus | August Equity | A British special education school. |
| 04-May-22 | Social Motion | The Center for Pursuit | Operator of a non-profit organization providing social skills and vocational training to individuals on the autism spectrum. |
| 04-May-22 | The Center for Pursuit | Social Motion | A non-profit supporting adults with disabilities and autism. |
| 02-May-22 | Coastal Behavior Consulting | Ivy Rehab Network | A pediatric ABA firm providing intervention to children and families affected by autism. |
| 25-Apr-22 | JoyBridge Kids | Frontline Healthcare Partners | Operator of therapy clinics for children with autism. |
| 07-Mar-22 | Psychiatric Centers at San Diego | Mindpath Health | San Diego’s largest mental health practice. |
| 01-Mar-22 | Frazier Behavioral Health | Quadrant Biosciences | Provider of behavioral health services to people with behavioral, physical, social, communication, and sensory challenges. |
| 28-Feb-22 | Behaven Kids | Search Fund Accelerator | Provider of mental healthcare to children with autism. |
| 22-Feb-22 | Lucent Development and Behavior Solutions | Acorn Health | Provider of ABA services serving children diagnosed with autism. |
| 16-Feb-22 | Blue Ribbon Health and Wellbeing | Queen’s Park Equity | Provider of specialist support services to people with learning disabilities and autism. |
| 14-Feb-22 | Resilience Treatment Center | Lightfully Behavioral Health | Operator of a behavioral health organization providing mental health care therapies. |
| 08-Feb-22 | Wilson Language Training | Alpine Investors | Print curriculum to aid dyslexic learners. |
| 04-Feb-22 | Creative Learning Center | Gryphon Investors | Operator of a nonpublic school serving individuals with developmental disorders. |
| 26-Jan-22 | Autism in Motion Clinics | Arsenal Capital Partners | A chain of autism care clinics delivering ABA therapy. |
| 23-Jan-22 | HEADS | Health Connect America | Provider of therapeutic services to at-risk children and families. |
| 14-Jan-22 | The Stepping Stones Group | Leonard Green & Partners | Provider of school-based behavioral health and therapeutic services catering to children with special needs and autism. |
| 14-Jan-22 | Monarch House | BDC Capital | Interdisciplinary treatment centers serving individuals with autism. |
| 13-Jan-22 | The Southcoast Autism Center | The Stepping Stones Group | Provider of autism spectrum disorder treatment services. |
| 11-Jan-22 | Care and Comfort | Androscoggin Home Health Services | Provider of home and behavioral health care services to clients of all ages. |
| 10-Jan-22 | AFLSonline | CentralReach | A platform providing functional living skills for people with autism. |
| 10-Jan-22 | Don Johnston | Five Arrows Capital Partners | Developer of education learning tools serving people with special needs and learning disabilities. |
| 01-Jan-22 | Global Teletherapy | PresenceLearning | Provider of online therapy services to children, schools and parents. |
| 01-Jan-22 | PresenceLearning | Spectrum Equity | A teletherapy platform for K-12 special education providers. |
| 01-Jan-22 | Autism Learning Center | KNR Therapy | An autism learning center providing ABA therapy. |
| 10-Dec-21 | Conscious Discipline | Prairie Capital | Online and in-person SEL curriculum and instruction for pre-K to grade 3. |
| 01-Nov-21 | Effective School Solutions | Frazier Healthcare Partners | Provider of in-district clinical services for students with emotional and behavioral problems. |
| 27-Aug-21 | Acorn Health | Ontario Teachers’ Pension Plan | Provider of ABA therapy to children with ASD. |
| 30-Apr-21 | Priorities ABA | Gryphon Investors | Provider of behavioral consulting and therapy services offering treatment for children and families with autism. |
| 31-Mar-21 | Behavior Therapy Clinic | Ridgemont Equity Partners | Provider of ABA and behavior intervention services for children. |
| 15-Mar-21 | EBS Healthcare | The Stepping Stones Group | Provides pediatric therapy and special education services for families, schools, and communities. |
| 18-Feb-21 | Behavior Analysis Center For Autism | Gryphon Investors | Provider of ABA services for individuals with autism and other related developmental disabilities. |
| 29-Jan-21 | Access Behavior Analysis | ABRY Partners | Operator of an ABA therapy center in Indiana, United States. |
Meet the Team Behind This Report
With over two decades of experience, Jacob is the Managing Director of Navagant, having been a key contributor since its inception. Leading as Managing Director and Co-Founder, he has played a vital role in establishing Navagant’s strong brand presence, building relationships with clients and servicing them with integrity. Demonstrating a remarkable talent for deal-making and unwavering dedication to his clients, Jacob has earned recognition as a leader in various industries, most prominently the Education and Training industry. He began his career at Rabobank International and later focused on software and direct marketing industries with Andersen Corporate Finance LLC. Then, in 2003, he founded Capstone Partners and led its Education and Training Practice until 2023, when he co-founded Navagant. As a highly accomplished leader, Jacob serves as an inspiring mentor and role model to the firm’s up-and-coming professionals, further solidifying his significant contributions to the investment banking industry.
Shawn is a Founding Member and Managing Director of Navagant and brings over 19 years of experience to the firm. Shawn has led execution efforts on 70+ transactions resulting in over $3.5 billion of proceeds for clients. He assists owners of middle-market companies in achieving their strategic growth objectives, exit strategies, and liquidity goals. Formerly, he served as a Managing Director of Capstone Partners in the Education and Training practice. His investment banking career began with Raymond James, where he focused on deal execution and client development for both public and private companies. Shawn’s previous experience includes serving as an officer in the US Navy where he served as a destroyer navigator and communications officer, student naval aviator, and fleet Tomahawk cruise missile officer.
Cherry is an Associate at Navagant. Prior to Navagant, she was an Analyst in Capstone Partners’ Education and Training practice. Cherry is keen on learning about the financial markets. She has interned at Allied Millennial Partners as an investment banking analyst and at the Shenzhen Stock Exchange as a fixed income analyst. Cherry received her BA in Economics from Emory University and earned her MS in Education from Harvard University.
Endnotes & Sources
- Derivita. K-12 Education Federal Funding. Accessed October 25, 2023. https://www.derivita.com/federal-funding
- Disability Rights California. Access to ABA Therapy. Accessed October 23, 2023. https://www.disabilityrightsca.org/publications/access-to-aba-therapy
- Charter SELPA. Federal IDEA Allowable Use of Funds. Accessed October 23, 2023. https://charterselpa.org/wp-content/uploads/2018/07/Federal-IDEA-Allowable-Use-of-Funds.pdf
- Disability Scoop. Biden Budget Calls For Increase In Special Education Spending. March 31, 2022. https://www.disabilityscoop.com/2022/03/31/biden-budget-calls-for-increase-in-special-education-spending/29781/
- Education Week. The Number of Students in Special Education Has Doubled in the Past 45 Years. July 2023. https://www.edweek.org/teaching-learning/the-number-of-students-in-special-education-has-doubled-in-the-past-45-years/2023/07
- American Speech-Language-Hearing Association. Overview of Funding for Pre-K-12 Education. Accessed October 23, 2023. https://www.asha.org/advocacy/schoolfundadv/overview-of-funding-for-pre-k-12-education/
- Education Week. Special Education: Definition, Statistics, and Trends. December 2019. Accessed October 12, 2023. https://www.edweek.org/teaching-learning/special-education-definition-statistics-and-trends/2019/12
- Research and Markets. Special Education Software: Global Strategic Business Report. Accessed October 17, 2023. https://www.researchandmarkets.com/report/special-education-software
- PitchBook Data. Special Education M&A Activity and Buyer Composition. 2018 to 2023.